Citi Says Brent Crude Oil Price Could Rise to This Level If Iran Conflict Continues

Investing.com - Citigroup analysts say that after energy infrastructure in the Middle East became a target of attacks this week, hopes for a quick resolution to the Iran conflict have diminished.

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In a report, analysts including Alex Saunders and Dirk Willer added that Citigroup’s commodities strategy team has “gradually shifted to bullish,” believing that the global oil benchmark Brent crude futures have “more upside potential.”

Citigroup analysts currently expect that if disruptions in oil flows caused by attacks on energy production sites persist for another 4 to 6 weeks, Brent crude could rise to the $110 to $120 per barrel range.

They also believe there is a 30% chance that if “further attacks on energy infrastructure” cause long-term damage to supply, or if the Strait of Hormuz—an important waterway in southern Iran—remains effectively closed until June, Brent crude could climb to $150 per barrel.

On Friday, Brent crude futures hovered around $108 per barrel. Earlier this week, following Israel’s attack on South Pars (Iran’s section of the world’s largest natural gas field), the contract surged to about $119 per barrel. Tehran then retaliated against Middle Eastern natural gas facilities, including a major facility in Qatar.

The mutual bombings of key energy infrastructure have heightened concerns that even if the U.S. and its allies successfully attempt to reopen the Strait of Hormuz, supply disruptions could persist long-term.

Qatar’s main natural gas facility, Ras Laffan, was attacked by Iran, which said its export capacity had decreased by 17%, with repairs expected to take up to five years. Qatar is a major natural gas exporter, especially to Europe, where benchmark natural gas prices have soared, raising fears of inflation spikes.

The New York Times reports that Iran continues retaliatory strikes, with Middle Eastern countries allied with the U.S. saying they are facing incoming drones and missiles. The paper added that after missile alerts sounded in Jerusalem and northern Israel at night, Israel launched strikes against Tehran.

In a statement cited by The Wall Street Journal, Iran’s Supreme Leader Ayatollah Ali Khamenei said, “We must take security away from our domestic and foreign enemies and give it to our people.” This provocative message was issued by Khamenei, son of the late leader Ali Khamenei, amid Israel’s ongoing systematic targeting of Iranian regime officials in an attempt to topple them.

Israeli Prime Minister Benjamin Netanyahu confirmed that U.S. President Donald Trump has asked Israel to pause future attacks on Iran’s energy infrastructure.

Saudi Arabia warned that if the conflict does not end before April, oil prices could rise above $180 per barrel, while the White House has been scrambling to reassure the tense markets. U.S. Treasury Secretary Janet Yellen suggested that Washington could release more emergency oil reserves or even lift some sanctions on Iranian oil exports to help ease supply constraints.

The Wall Street Journal reports, citing U.S. military officials, that Washington and its allies are also stepping up efforts to reopen the Strait of Hormuz. If Iran’s attacks on ships crossing the strait decrease in danger, U.S. warships may be able to escort vessels in and out of the Persian Gulf, one of the world’s most important energy-producing regions.

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